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Petition of Hagenbuch

Supreme Court of New Hampshire

January 13, 2017

PETITION OF KELLY HAGENBUCH (New Hampshire Department of Health and Human Services)

          Submitted: September 21, 2016

         Department of Health and Human Services

          Tarbell & Brodich Professional Association, of Concord (Friedrich K. Moeckel on the brief), for the petitioner.

          Joseph A. Foster, attorney general (Laura E. B. Lombardi, senior assistant attorney general, on the brief), for the New Hampshire Department of Health and Human Services.

          BASSETT, J.

         The petitioner, Kelly Hagenbuch, has petitioned for a writ of certiorari, see Sup. Ct. R. 11, challenging the termination of her food stamp benefits by the New Hampshire Department of Health and Human Services (department). The department terminated the petitioner's benefits because it found that her income exceeded the maximum amount permitted by the program. In calculating the petitioner's income, the department included distributions from an irrevocable trust, of which the petitioner is the sole beneficiary, that had been made by the trustee to third parties. These distributions included payments for trust expenses and for legal fees that the petitioner had incurred to obtain public benefits. On administrative appeal, the presiding officer of the department's Administrative Appeals Unit (AAU) agreed with the department that the trust distributions counted as income to the petitioner. In her petition for a writ of certiorari, the petitioner claims that the presiding officer erred because the trust distributions should have been excluded from her income for the purpose of determining food stamp benefits. We reverse.

         The record supports the following facts. The petitioner began receiving food stamp benefits through the department in approximately 2008. The department is the state agency tasked with administering the federal supplemental nutrition assistance program, commonly known as food stamps. See 7 U.S.C. § 2013(a) (2012) (amended 2014); RSA 161:2, XIII (2014). Under the program, the department disburses funds to eligible, low-income households so that the household members may "obtain a more nutritious diet." 7 U.S.C. § 2011 (2012). Generally, a household is eligible for food stamps if the household's resources and income fall below certain thresholds. See 7 C.F.R. §§ 273.8(b), 273.9(a) (2016). Alternatively, a household may be "categorically eligible" for food stamps, without regard to its resources and income, if household members qualify for certain other governmental assistance programs. See id. §§ 273.2(j)(2), 273.8(a), 273.9(a). The parties agree that the petitioner is categorically eligible for food stamp benefits.

         Separate from the question of a household's eligibility for food stamps is the amount of benefits to which an eligible household is entitled. The amount of benefits an eligible household receives depends, in part, upon the household's income. See id. § 273.10(e)(2)(ii)(A); see also 7 U.S.C. § 2017(a) (2012). In order to track household income and determine the amount of benefits, the department periodically requires each household receiving food stamp benefits to provide current income information. See generally 7 C.F.R. § 273.14 (2016); N.H. Admin. Rules, He-W 746.02. This is known as the recertification process. See 7 C.F.R. § 273.14(b).

         In early 2013, as part of her recertification for food stamp benefits, the petitioner submitted income and asset information to the department. In connection with her submission, the petitioner provided information regarding distributions made and income generated by the Kelly Jean Hagenbuch Irrevocable Trust (Trust), of which the petitioner is the sole beneficiary during her lifetime. The Trust was originally funded as part of the settlement of a lawsuit arising out of an injury to the petitioner. Pursuant to the terms of the Trust, an "Independent Trustee" (trustee) is vested with the sole discretion to make distributions to the petitioner or for her benefit.

         The department examined the Trust's income and distributions between August 2012 and February 2013 and counted the following distributions as income to the petitioner (collectively, "the trust distributions"): (1) distributions that the trustee made to third parties to cover trust expenses-trust administration fees, legal fees, investment-management expenses, and tax preparation fees-and (2) distributions that the trustee made to the petitioner's attorneys to pay the legal fees that the petitioner incurred to obtain public benefits. These distributions totaled $20, 344.94. None of the distributions was paid directly to the petitioner.

         In June 2013, the department issued a Notice of Decision, in which it "[c]losed, " i.e., terminated, the petitioner's benefits, concluding that the petitioner's net income exceeded the maximum amount permitted by the program. The petitioner's mother, serving as the petitioner's representative, filed a timely request for a "fair hearing" with the AAU. RSA 126-A:5, VIII (2015).

         The presiding officer of the AAU affirmed the department's decision that the trustee's payments to third parties constituted income to the petitioner. With the inclusion of those distributions, the petitioner's income would be too high for her to receive any benefits. The presiding officer denied the petitioner's motion for reconsideration as it related to the issues relevant to the present petition. This petition followed.

         On appeal, the petitioner requests that we reverse the presiding officer's decision that the department properly counted the trust distributions as income. First, she argues that the trust distributions do not meet the definition of income under the regulations. Second, she argues that, even if the distributions are deemed to be income, they fall within one of the income exclusions in the regulations. Third, the petitioner contends that the presiding officer erred by relying upon evidence that was not submitted by either party. The petitioner also requests that we determine whether future payments that the trustee intends to make to the petitioner's guardian will count as income.

         "The only judicial review of a fair hearings decision issued by the department is by petition for a writ of certiorari." Petition of Kalar, 162 N.H. 314, 318 (2011) (quotation and brackets omitted). "Review on certiorari is an extraordinary remedy, usually available only in the absence of a right to appeal, and only at the discretion of the court." Petition of Chase Home for Children, 155 N.H. 528, 532 (2007). Our review of the department's decision on a petition for writ of certiorari entails examining whether the department has "acted illegally with respect to jurisdiction, authority or observance of the law or has unsustainably exercised its discretion or acted arbitrarily, unreasonably ...


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